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Responding to the global financial crisis, the Cabinet yesterday approved a measure extending the 100-per-cent state guarantee on bank deposits until August 2011 in a bid to prevent massive withdrawals in the banking system.

Finance Minister Suchart Thadathamrongvech said Thai banks had to date experienced no financial problems triggered by the global crisis, but there could be some negative impacts over the next two to three years.

As a result, the government wants to continue providing a 100-per-cent guarantee on bank deposits until August 10, 2011, after which the deposit-insurance scheme will replace the blanket state guarantee.

Previously, the deposit-insurance scheme - which came into effect on August 10 this year - started with a 100-per-cent guarantee on all bank deposits.

In the second year of its enforcement, the deposit-insurance scheme was to cover a maximum of Bt100 million per account.

In the third and fourth years, the maximum insured amounts were to be reduced to Bt50 million and Bt10 million per account, respectively.

In the fifth year, the maximum insured amount would be only Bt1 million per account.

Suchart said the Cabinet-approved changes meant all deposits would now be fully guaranteed until the start of the fourth year - in August 2011 - when the maximum insured amount will be raised from the previously planned Bt10 million to Bt50 million per account.

The maximum insured amount will then be reduced to Bt1 million per account in the fifth year, in August 2012.

The finance minister said these changes were necessary to ensure that the country was not damaged by irregular capital flows resulting from enforcement of the deposit insurance scheme.

Meanwhile, the Cabinet also approved a budget of Bt2.2 billion for cassava and corn pledging schemes to help farmers hit by declining prices.

Large groups of farmers have rallied in several provinces asking for government intervention in the agricultural markets, which have seen prices falling in the wake of a looming global recession.

The government said it would buy cassava at Bt1.80 to Bt1.90 a kilogram from November to next April, with a target to cover up to 5 million tonnes.

It will also guarantee the price for corn at Bt8.50 per kilogram for a total of 500,000 tonnes.

Corn pledging will start next month and run until the end of the year. During this period, the government will ban imports, in order to ensure that the local produce is not affected by lower-cost competition.